The effect of economic freedom on civil liberties in the short run: physical integrity rights, 2000-2011.

Author:Szarka, Robert
  1. Introduction

    In 1944, in the first edition of The Road to Serfdom, Friedrich A. Hayek warned that continuing the central planning measures adopted during wartime in order to promote the "common welfare" might ultimately lead to totalitarianism. If the success of a book that echoed Herbert Spencer's warning about "The Coming Slavery" (Spencer [1884] 1981, pp. 31-70) six decades earlier was surprising at the time, the book's continued popularity seven decades hence--at a time when wholesale planning, at least, has been largely discredited--is shocking. Bruce Caldwell, the current editor of Hayek's collected works, argues that renewed interest in Serfdom is misplaced, since "Hayek was arguing against [full] socialist planning, not the welfare state" (Caldwell 2011, p. 84). In contrast, Andrew Farrant and Edward McPhail argue that recent commentators have correctly, albeit unsubtly, interpreted Hayek's thesis as applicable to something far short of a full command economy (Farrant and McPhail 2010a, 2010b, 2010c). As Hayek himself put it in the preface to the 1976 edition, with a socialism oriented toward extensive income redistribution, "the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same" as that described in Serfdom (Hayek [1944] 2007, p. 55).

    The sustained popularity and influence of Serfdom is rivaled only by Milton Friedman's Capitalism and Freedom, which characterized competitive capitalism as "a system of economic freedom and a necessary condition for political freedom" (Friedman [1962] 2002, p. 4). The book's focus on concrete policy issues within the context of a modern welfare state suggests that Friedman, too, saw the relationship between economic and political freedom as relevant to the contemporary welfare state.

    History does not seem to have borne out a strong version of Hayek's or Friedman's thesis: the encroachment on economic freedom in liberal democracies after World War II does not appear to have dramatically impacted political freedom. (1) Further, as Farrant and McPhail (2009) note, the order in which authoritarian regimes have arisen is the reverse of that in Hayek's story: first dictatorship, then nationalization.

    Nevertheless, beyond the intrinsic value of economic freedom or its contribution to economic growth, the nature of the relationship between economic and political freedom remains salient. For example, Martin (2012) argues that the Arab Spring of 2010-2012, which was sparked by the self-immolation of a desperate Tunisian entrepreneur, can be interpreted as "a revolution for economic freedom" (p. 94) and an attempt to break "the vicious circle between economic and political oppression" (p. 95). Likewise, despite hopes that mainland China's cautious embrace of economic freedom, which has done so much to raise Chinese living standards, will eventually result in greater political freedom, substantive changes have yet to materialize. (2)

    In this paper, I distinguish between political freedom and civil liberties--two concepts often lumped together under the name "political freedom" in empirical work related to this topic--and explore the possibility that we can analyze the impact of economic freedom on civil liberties separate from its impact on political freedom. I also explore the possibility that economic freedom is more important for some civil liberties than others, and at different levels of economic freedom (and its covariates). The results suggest that it may be useful to consider these concepts separately in future work.

  2. Literature Review

    In the preface to a later edition of Capitalism and Freedom, Friedman noted: "If there is one major change I would make, it would be to replace the dichotomy of economic freedom and political freedom with the trichotomy of economic freedom, civil freedom, and political freedom" (Friedman 2002, pp. ix--x). While he saw economic freedom as a necessary condition for both political freedom and civil freedom, political freedom was not a necessary condition for political or civil freedom. Further, political freedom "under some circumstances promotes economic and civic freedom, and under others, inhibits economic and civic freedom" (Friedman 2002, p. x). He offered Hong Kong as an example of a country where economic and civil freedom flourished despite--or even because of--the absence of political freedom. (3)

    Hayek, too, distinguished between democracy, as representative government, and various freedoms he referred to as individual, personal, cultural, or spiritual. The market facilitates economic cooperation in the absence of complete agreement about ultimate ends, whereas planning requires that unanimity be enforced even where none exists. Thus, while a democratic government that confines its action to the sphere where agreement exists is compatible with freedom, "planning leads to dictatorship because dictatorship is the most effective instrument of coercion and the enforcement of ideals." It is the suppression of freedom entailed by planning that chiefly concerns Hayek: "We have no intention, however, of making a fetish of democracy ... democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom." Nor is democracy an infallible guarantor of freedom: "there has often been much more cultural and spiritual freedom under an autocratic rule than under some democracies--and it is at least conceivable that under the government of a very homogenous and doctrinaire majority democratic government might be as oppressive as the worst dictatorship" (Hayek [1944] 2007, p. 110).

    This attitude toward democracy is consistent with that of other writers in the liberal tradition, who see the state's legitimate role (if any) primarily as safeguarding individual negative liberties (in the sense of Berlin [(1958) 1969]). Democracy is simply the most expedient form of government, because it "makes possible the adaptation of the government to the wishes of the governed without violent struggles" (Mises [1927] 2010, p. 42) and ensures the peace that is necessary for the full enjoyment of private property. Some writers in this tradition go so far as to find a role for government in keeping markets competitive, issuing sound money, or providing basic relief of poverty, but none would advocate policies that were essentially redistributive. (4)

    It may be difficult to categorize every liberty neatly as economic, political, or civil, but the literature does provide some specific examples. Jewkes (1948, p. 190) lists five "fundamental forms of...

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